What does the Autumn Budget mean for your savings, pensions and mortgages?

While there were no increases to rates of National Insurance, income tax and VAT, other personal tax rises could generate £15 billion in 2029/30, according to the OBR.

After weeks of anticipation, the Chancellor of the Exchequer, Rachel Reeves, finally delivered her second Autumn Budget today. While she stuck to the Government’s pledge not to raise the rates of National Insurance, Income Tax and VAT, many people will still find themselves shouldering a greater tax burden as a result of new measures.

“The Budget can be complex to unravel but it’s essential consumers take time to review how the announced changes will impact them,” said Rachel Springall, Finance Expert at Moneyfactscompare.co.uk.

“Some decisions will be hard to swallow, and others celebrated, so undoubtedly there is going to be a divide in sentiment,” added Springall. She urged anyone feeling anxious about their situation to seek advice.

How will the Autumn Budget affect savings and pensions?

Income tax bands freeze extended for three years

Although the Chancellor decided against raising the rates of income tax, hundreds of thousands of consumers should still expect to face a bigger bill over the coming years as it was confirmed frozen thresholds will remain in place until April 2031.

^{Note: Income Tax bands and rates differ if you live in Scotland, and is paid to the Scottish Government. For more information, visit the Government website.}

These bands are used to determine how much tax someone owes based on their annual earnings and are traditionally meant to rise in line with inflation. However, they haven’t been updated since the freeze was first initiated in April 2021. Meanwhile, people are being pulled up the tax ladder as wages grow – a process known as ‘fiscal drag’.

While the three-year extension could generate £8 billion in 2029/30, according to the Office for Budget Responsibility (OBR), it will add approximately 780,000 more basic-rate, 920,000 more higher-rate and 4,000 more additional-rate taxpayers to previous forecasts for 2029/30.

Not only will those being pushed up the ladder have to pay more income tax, but they’ll also see their Personal Savings Allowance (PSA) slashed. This is the total amount of interest that can be earned from savings each year before needing to pay tax.

Increased tax on savings’ interest from April 2027

Worryingly for those who exceed their Personal Savings Allowance, the Chancellor revealed tax owed on savings’ interest will rise by two percentage points across all bands from April 2027. Tax on income from property and dividends is also set to increase by the same amount – the latter from April 2026.

Cash ISA allowance cut to £12,000 from April 2027

However, the Chancellor confirmed that the cash ISA allowance will be slashed from April 2027 for those under the age of 65 in the hopes of getting more people to invest using a stocks and shares ISA. Although they’ll still be able to deposit up to £20,000 across ISAs per tax-year, this will mean only £12,000 can be allocated to cash ISAs.

This may dismay many savers who helped to plough a record-breaking £14 billion (seasonally adjusted) into cash ISAs in April 2025 alone. “Cash ISAs are popular and have hit milestones this year,” said Springall, noting that the market has also seen a record number of products and providers.

“It will be interesting to see how the shake-up will impact the rates and availability of cash ISAs on offer,” she continued, adding that “we could well see a stampede of savers rushing to make full use of their current allowance before the limit is cut”.

While Springall recognised that cash savings have struggled to beat inflation over recent years, she warned that restricting contributions to ISAs could have far-reaching consequences beyond the savings market.

“The cash ISA limit cut can have repercussions on institutions, like mutuals, who use ISA deposits as a source of funding, so we could start to see mortgage rates increase, which would cause chaos in the housing market,” she explained.

Meanwhile, she said “pessimistic sentiment around investing will not improve overnight” and that better “financial education is a big part of making consumers feel more informed and empowered to invest", which will also take time to implement.

National minimum wage increased to £12.71 an hour

Away from ISAs, the Chancellor sought to alleviate pressures on the UK’s lowest-paid workers by announcing that the national minimum wage for over-21s will go up by 50p to £12.71 an hour from next April. However, frozen tax thresholds mean that a growing number of minimum wage workers will need to sacrifice a portion of their earnings to the taxman over the next few years.

Furthermore, businesses must find ways to accommodate this latest rise, despite many still reeling from the hike in employer’s National Insurance contributions (NICs) and previous increase to the national minimum wage that formed part of last year’s Budget.

State Pension receives 4.8% boost

The Chancellor also confirmed those who receive the State Pension will get an above-inflation boost of 4.8% from April 2026. This is per the ‘triple lock’ system, which guarantees the State Pension will rise by whichever is the highest of inflation, annual earnings growth or 2.5%.

As a result, the new State Pension will increase by approximately £570 to £12,547.60 next year – worryingly close to the point at which people start paying tax on their earnings. With the Personal Allowance threshold now set to remain at £12,570 for another five years, even those whose only source of income is the new State Pension will be taxed if it rises much further.

Salary sacrifice contributions subject to National Insurance from 2029

In a blow to those in the process of saving for retirement, the Chancellor revealed that salary-sacrifice contributions above £2,000 will be subject to National Insurance.

Salary sacrifice enables an employee to exchange part of their wage for another benefit, such as a company car, childcare vouchers or insurance policy. It’s commonly used as a tax-efficient way of setting money aside for retirement, as employees can have the ‘sacrificed’ portion of their salary paid into their workplace pension (in addition to their employer’s contributions).

There isn’t currently a limit on how much of their salary someone can sacrifice (so long as it remains above the national minimum wage), and the contributions into their pension wouldn’t be taxed providing they don’t exceed the £60,000 annual allowance.

According to Springall, this makes it a “great option for consumers to boost pension provisions beyond auto-enrolment minimum contributions, so the decision to create a £2,000 annual threshold sends the wrong message about long-term planning to diligent savers”.

How will the Autumn Budget affect mortgage borrowers?

'Mansion Tax' on properties valued over £2 million

Leading up to the Budget, there were many rumours about changes to the ways properties are taxed. Today, the Chancellor confirmed that a High Value Council Tax Surcharge (also being referred to as a 'mansion tax’) will apply to properties worth over £2 million from April 2028, after revealing that the average Band D family home pays more in Council Tax than a £10 million property in Westminster.

“The controversy around such property tax changes could steer sellers to feel rushed to transact before the levy comes into force, but homeowners should always seek advice before making any rash decisions,” said Springall. She added there is also concern that the move “could discourage homeowners from improving their homes, to keep the value of a home from rising above the £2 million threshold”.

While the mansion tax will only affect a small number of property owners, Oliver Dack, Spokesperson at Mortgage Advice Bureau, offered reassurance to anyone worried about affordability following today’s Budget.

“A base rate cut in December is looking increasingly likely and further reductions are still on the cards for next year,” said Dack. He explained that this “could see mortgage rates continue to trend downwards heading into 2026, and potentially lower borrowing costs could help to offset people’s rising tax liabilities”.

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